South African Rand: SARB hikes again but environment stays tough – Commerzbank
Commerzbank’s Volkmar Baur reports the South African Reserve Bank (SARB) raised its benchmark rate by 25 bps to 7.25%, the second hike this year as earlier expectations for cuts faded with higher Oil prices. Despite the move, South African Rand (ZAR) weakened, largely on Dollar strength.
South African Reserve Bank (SARB) has raised its benchmark interest rate for the second time this year by 25 basis points to 7.25%, as reported by Commerzbank's Volkmar Baur. Despite the hike, the South African Rand (ZAR) weakened, influenced largely by the strengthening of the US dollar. The central bank remains cautious about inflation risks but acknowledges a high hurdle for further rate hikes.
Factors such as the Iran conflict, higher oil prices, US interest rates, and upcoming local elections add challenges to the ZAR's outlook. The SARB and Governor Kganyago aimed to demonstrate firmness during the press conference, acknowledging the impact of the Iran conflict on South Africa's economy, which has created downside risks for growth and tilted inflation risks to the upside.
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